January 2013
CONFIDENTIAL INTERNAL USE ONLY
China Dredging Group Co., Ltd.Fujian Provincial Pingtan
County Ocean Fishing Group Co., Ltd.
Business Combination with China Growth Equity Investment Ltd.
PINGTAN MARINE
2
Certain statements made during this presentation are forward-looking and are subject to risks and uncertainties. The forward-looking statements made are based on our beliefs, assumptions and expectations of future performance, taking into account all information currently available to us. Actual results could differ materially from the forward-looking statements made during this presentation.
When we use the words "believe," "expect," "anticipate," "plan," "will," "intend" or other similar expressions, we are identifying forward-looking statements.
The forward-looking statements made during this presentation are subject to the safe harbor of the Private Securities Litigation Reform Act of 1995. We refer you to our filings with the Securities and Exchange Commission for a more detailed discussion of the risks that may have a direct bearing on our operating results, performance and financial condition.
Additional Information
In connection with the proposed business combination, we are preparing and filing with the Securities and Exchange Commission (the “SEC”) a proxy statement. When completed, a definitive proxy statement and a form of proxy will be mailed to the shareholders of China Growth Equity Investment Ltd. (“China Growth”). Before making any voting decision, shareholders are urged to read the proxy statement carefully and in its entirety because it will contain important information about the proposed business combination. Shareholders will be able to obtain, without charge, a copy of the proxy statement and other relevant documents filed with the SEC when they become available through the SEC's website at http://www.sec.gov. Shareholders will also be able to obtain, without charge, a copy of the proxy statement and other relevant documents when they become available by contacting China Growth, CN11 Legend Town, No. 1 Balizhuangdongli, Chaoyang District, Beijing, PRC, telephone number : +86-10-6550-3186, Attn: Chantelle Bai..
Participants in the Solicitation
China Growth and its directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about China Growth 's directors and executive officers is set forth in China Growth annual report on Form 10-K for the fiscal year ended December 31, 2011. Additional information regarding the interests of such potential participants in the business combination, which may be different than those of China Growth’s shareholders generally, will be included in the proxy statement and other relevant documents filed with the SEC when they become available.
Forward Looking Statement
3
Why Pingtan Marine?
Combination creates the largest U.S. listed marine services operating company in China
Focuses on providing dredging services and territorial sea fishing globally
Significant growth opportunities globally and in China
Pingtan Marine Leadership
Attractive Financial Benchmarks
Demonstrated Operational
Strength
Management Invested in Future
Success
Currently operates a fleet that consists of 9 dredgers and 40 fishing vessels
Completed over 120 dredging projects across 10 coastal provinces in China
Sell approximately 30 different fish species to over 300 distributors and retailers
Current owners rolling all of their equity into business combination
Chairman of the combined company will invest additional equity into Pingtan Marine
Best-in-class margins and growth rates versus peers
2012 PF EBITDA of $143 million
Pro forma revenue of $279 million and net income of $106 million in 2012
4
Transaction Overview
Pingtan Marine to become publicly traded through a business combination with China
Growth Equity Investment Ltd. (NASDAQ: CGEI)
Pingtan Marine to apply to be listed on NASDAQ post the transactions under the proposed
ticker symbol “PME”
Fully diluted equity value of approximately $835 million, TEV/PF EBITDA is 4.0x in 2012
and is estimated to be 3.0x in 2013
Transaction
Consideration
Management and
Board
Expected Closing
Pingtan Marine will receive up to 77,000,000 China Growth ordinary shares, in aggregate,
including 52,000,000 ordinary shares exchanged with China Dredging and 25,000,000 ordinary shares issued to Pingtan Fishing
Through his 54% ownership of China Dredging and 75% ownership of Pingtan Fishing,
Mr. Xinrong Zhuo will own approximately 56% of Pingtan Marine. Public Shareholders will own approximately 30% of Pingtan Marine.
Mr. Xinrong Zhuo, the founder, chairman and controlling shareholder of both China
Dredging and Pingtan Fishing will be the chairman of Pingtan Marine
Board will be comprised of 7 members including 4 independent directors with remaining
representatives from Pingtan Marine
February 2013
Note:Ownership percentages are calculated as basic ownership and exclude warrants, options and redemptions from the ownership calculation. 1.
$49$92 $81
$111 $120$4
$10$25
$39
$68
$53
$102 $106
$150
$188
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
2010A 2011A 2012A 2013P 2014P
China Dredging Pingtan Fishing
$72
$127 $114$144 $155$6
$13$29
$46
$80
$78
$140 $143
$190
$235
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
2010A 2011A 2012A 2013P 2014P
China Dredging Pingtan Fishing
$73
$128 $115$139 $152$5
$11$27
$42
$73
$78
$139 $142
$181
$225
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
2010A 2011A 2012A 2013P 2014P
China Dredging Pingtan Fishing
$131$227 $212
$287 $319$15
$26 $67
$107
$183
$146
$253 $279
$394
$502
$0.0
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
2010A 2011A 2012A 2013P 2014P
China Dredging Pingtan Fishing
5
Pro Forma Financial Review (1)
Note::(1) Assumes Pingtan Marine’s pro forma financial data equals the sum of China Dredging and Pingtan Fishing’s financial data. LTM and estimated financials are prepared with financial data provided by Pingtan Fishing and China Dredging’s management.(2) China Dredging’s 2011A net income excludes gain on obligation under Make-Good Escrow of $14.1 million and loss on derivative of $6.8 million, tax effected at 25%, and accretion of discount on preferred shares of $6.1 million
Net Income (2)EBITDA
Pingtan Marine’s revenue and net income in 2012 was $279 million and $106 million, respectively, according to the unaudited non U.S. GAAP financials provided by the management
Revenue Gross Profit
2010A – 2014P CAGR: 36%2012A – 2014P CAGR: 34%
2010A – 2014P CAGR: 30%2012A – 2014P CAGR: 26%
2010A – 2014P CAGR: 32%2012A – 2014P CAGR: 28%
2010A – 2014P CAGR: 37%2012A – 2014P CAGR: 34%
6
Experienced and Committed ManagementChairman of the Pingtan Marine, Mr. Xinrong Zhuo is a very successful entrepreneur who founded China Dredging, Pingtan Fishing, ▪Fuzhou Honglong Ocean Fishery Co., Ltd., Fujian Road & Bridge Construction Co., Ltd. and Fuzhou Dongxing Longju Real Estate Development Co., Ltd.
Chairman of the board of China Dredging and CEO since August 2010
Chairman of Fujian Provincial Pingtan County Ocean Fishing Group Co., Ltd. since 2004
Director of Fujian Road & Bridge Construction Co., Ltd.
Chairman of Fuzhou Dongxing Longju Real Estate Development Co., Ltd.
Xinrong ZhuoChairman, Chief Executive
Officer and Founder
Bin LinSenior Vice President
Alfred HoFinancial Vice President
Qing LinAssistant to Chairman
Deming ChenVice General Manager
Senior vice president of China Dredging since August 2010
Member of the board of directors of Industrial Securities Co., Ltd. (SHSE:601377) from November 2003 to October 2006BS in Pharmacy from Shanghai Medical College of Fudan University
CFO of China Dredging since November 2010
Independent director of New Universe International Group
Bachelor’s degree in Science from the University of Toronto
Director of Wonder Dredging Engineering LLC
Director of Fujian Xing Gang Port Service Co., Ltd. since January 2008
Director of Fujian Road & Bridge Construction Co., Ltd. since December 2008
Director of Fujian Huashang Real Estate Development Co., Ltd. from September 2007 to 2010
14 years working experiences in fishery industry
Vice President of Fujian Provincial Pingtan County Ocean Fishing Group Co., Ltd. since 1998
Supervisor of Pingtan Grain and Oil Industrial Company
China Dredging Group Co., Ltd.
Fujian, 6.4%
Guangdong, 12.1%
Guangxi, 11.6%
Hainan, 1.2%Hebei, 1.5%
Jiangsu, 6.4%
Liaoning, 23.1%
Shandong, 4.5%
Tianjin, 32.3%Zhejiang, 0.9%
8
In 2008, Mr. Zhuo identified opportunities in China’s rapidly
expanding land reclamation and marine infrastructure market and founded China Dredging to capitalize on these trends by providing specialized dredging services
Based on the dredging volume and revenue, China Dredging is
now one of the leading private providers of dredging services in China
Reclamation dredging, capital dredging and maintenance dredging
are the major three types of services China Dredging provides, with reclamation dredging contributing about 72% of total revenue
China Dredging has completed over 120 projects with aggregate
revenue in excess of $580 million from January 2010 to December 2012
China Dredging has stable revenue streams, with robust backlogs
through 2014
China Dredging has a modern, productive and varied fleet, with 4
owned vessels and 5 other rented ones
As of December 31, 2012, China Dredging employs 265 people in
its day-to-day operations
Business Overview
Revenue Breakdown By Province from Jan. 2010 to Dec. 2012
Guangxi Guangdong
Fujian
Zhejiang
HebeiLiaoning
China Dredging Operation AreaChina Dredging Headquarter
Shandong
Tianjin
Hainan
Jiangsu
9
Investment HighlightsFavorable Industry Landscape and Trends
Dredging industry participants in China:
1) Governmental institutions, such as Changjiang Waterway Buerau, and large SOEs, such as China Communications Construction Company Limited
2) Large independent dredging companies, such as China Dredging, Xiangyu Dredging Holdings Limited (Xiangyu), Shanghai Darun Port Construction Group Co. Ltd.
3) Small independent dredging companies
In September 2012, China's National Development and Reform Commission, announced approvals
for 60 projects with an estimated value of more than $157 billion in total, including 7 port or waterway projects, signaling the government's growing intent to bolster spending in the infrastructure space
Total dredging volume in China reached 1,311 million m³ by the end of 2010, representing a CAGR
of 31.5% since 2006 according to a Frost & Sullivan Report
From 2011 to 2015, total annual dredging volume in China is expected to grow at approximately
27.1% CAGR and reach 4,517 million m3 by 2015 according to a Frost & Sullivan Report
Land reclamation increased from 20 km2 in 2002 to 136 km2 in 2010, and is expected to increase with
at least 100 km2 each year, according to the State Oceanic Administration People’s Republic of China
According to People’s Daily Online, the land reclamation cost is between $ 35 million and $83 million
per km2, which indicates that the land reclamation revenue each year will reach between $3.5 billion and $8.3 billion
Favorable Industry
Landscape and Trends
Proven Business Model and Attractive Margins
Robust Backlog
Build and Transfer Strategy
Strong Customer Relationships
China Dredging operates as a subcontractor for State-Owned Enterprises (“SOE’s”) and its costs are significantly lower than its customers, creating substantial savings
China Dredging’s customers provide fuel and repositioning services for dredgers as part of its contracts, which reduces China Dredging’s exposure to increased direct costs from these items and eliminates the affect of large fluctuation of fuel prices on the company
China Dredging’s historical performance has established the company as one of the largest private providers of dredging services in China, enabling it to maintain sizable revenues with very attractive margins
10
Investment HighlightsProven Business Model and Attractive Margins
Cost Effectiveness
QualityEfficiency
Highly productive and flexible modern fleet is
managed for full utilization
Streamlined staffing rules and superior
recruiting practices limit labor cost
Flat organizational structure and tight
controls limit expenses
Favorable Industry
Landscape and Trends
Proven Business Model and Attractive Margins
Robust Backlog
Build and Transfer Strategy
Strong Customer Relationships
11
Investment HighlightsRobust Backlog
Backlog, derived from pipeline or other projects, comprises executed or signed contracts with specific schedules for commencement and firm pricing
The committed backlog is sufficient to sustain full utilization of China Dredging’s fleet for approximately up to 18 months
Consistency & Predictability in EarningsFavorable Industry
Landscape and Trends
Proven Business Model and Attractive Margins
Robust Backlog
Build and Transfer Strategy
Strong Customer Relationships
$ in million
Project Name Type Period Size (m3) Remainning
ContractRevenue
Guangdong Datang Sanbaimen Power Station Gangchi Channel Dredging Project Capital 12/2012-01/2013 950,000 1.0
Datang Sanbaimen Power Station Gangchi Channel Dredging Project Capital 01/2013-04/2013 3,500,000 6.3
Meizhouwan Gangxiu Harbour Xiuyu 8# Berth Project Capital 01/2013-04/2013 930,000 1.3
Meizhouwan Gangxiu Harbour Xiuyu 8# Berth Project Capital 11/2012-01/2013 600,000 0.2
Yingkou Economic and Technological Development Area XiongYue River Reclamation Project Reclaimation 12/2012-02/2013 1,800,000 3.0
Yingkou Economic and Technological Development Area XiongYue River Reclamation Project Reclaimation 12/2012-03/2013 4,000,000 5.1
Panjin Vessels Indsutrial Park Marine Equipment Manufacturing Park Reclamation Project Reclaimation 11/2012-02/2013 2,800,000 2.0
Panjin Vessels Indsutrial Park Marine Equipment Manufacturing Park Reclamation Project Reclaimation 12/2012-02/2013 2,600,000 3.2
Qidong Yuantuojiao Phase III Reclaimation 12/2012-03/2013 5,000,000 6.9
Lianjiang Kemen Industrial Park Phase II Reclaimation 01/2013-06/2014 33,040,000 154.0
Total 183.1
Backlog as of December 31, 2012
12
Investment HighlightsBuild and Transfer Strategy
Step IGovernment signs
agreement with GZB and agrees to inject $63.7 million through an SPV (BT entity) to create land
Lianjiang County(Government)
BT Entity$189.2 million
China Dredging(“CDG”)
Reclaimed Land~18 Mo. of ServicePays Dredging Services
China GeZhouBa(“GZB”, an SOE)
Step II Step III
GZB partners with CDG affiliate, creating the BT entity and agrees to inject $125.5 million through the BT Entity
CDG provides $154 million of reclamation dredging services over approximately 18 months
Step IV
BT entity transfers the land to the government
Step VGovernment repays
$125.5 million over 3 years after transfer of land
Notes:(1) Semiannual interest rate calculated at benchmark deposit and loan rate of 6.4% as of September 18, 2012 plus 2.0%
Fujian Yihai(CDG Affiliate)
$61.8 million$63.7
million
$63.7 million
After land is transferred, government repays $125.5 million to GZB and Fujian Yihai
The company’s build and transfer (“BT”) strategy, commenced in 2012, will expand the pipeline and give China Dredging more control over its projects as it assumes the role of a general contractor
Step IStep V
Lian
jiang
Pro
ject
Exa
mpl
e
Favorable Industry
Landscape and Trends
Proven Business Model and Attractive Margins
Robust Backlog
Build and Transfer Strategy
Strong Customer Relationships
Step II
Step II Step III
Step IV
Pipeline as of December 31, 2012($ in millions)Project Name Type Period Size (km2)
Contract Revenue
Project of Lianjiang Phase III Reclaimation 2014-2018 20 $1,000.0Project of Xiamen Xiangan International Airport Reclaimation 2013-2018 17 TBDProject of 5 New Cities in Fuzhou Reclaimation utill 2020 TBD 5,528.0
Total $6,528.0
Specializes in the maintenance
dredging, capital dredging, reclamation dredging, marine engineering, irrigation and environment work
Specializes in channel maintenance
dredging, embankment filling, civil engineering construction, and ship building and repairing
Specializes in the maintenance
dredging, reclamation dredging, waterway constructions and environmental dredging
Length of relationship: 4.5 years Length of relationship: 3.5 years Length of relationship: 3 years
Contract revenue since 2010: $124 million
Contract revenue since 2010: $150 million
Contract revenue since 2010: $55 million
Investment HighlightsStrong Customer Relationships China Dredging has achieved a strong record of performance
in completing projects in shorter time periods and at lower cost than customersChina Dredging’s customers prefer to maintain a close relationships with the company based on its record of performance on prior projects, which is an important factor in securing future business
China Dredging works with customers to establish ―training programs and technical cooperation arrangements that bolster consistency and quality of work
Contracts are negotiated directly with customers and not through competitive bidding
2012A Customer Breakdown
13
Top 3 Customers
Favorable Industry
Landscape and Trends
Proven Business Model and Attractive Margins
Robust Backlog
Build and Transfer Strategy
Strong Customer Relationships
CCCC Guangzhou
31.8%
Nanjing Water Conservancy
13.3%CCCC Shanghai
12.4%
Guangdong Jindonghai
12.2%
CCCC Tianjin10.5%
COEC-Dalian10.3%
Fujian Jingwei 3.9%
Others 5.6%
Fujian Provincial PingtanCounty Ocean Fishing Group Co., Ltd.
15
Pingtan Fishing is a rapidly growing fishing company
engaged in territorial sea fishing that supplies products to distributors, restaurants and supermarkets
Pingtan Fishing’s vessels operate in the protected zones of
1) the Exclusive Economic Zones in Arafura Sea in Indonesia and 2) in the Bay of Bengal in India
As of December 31, 2012, Pingtan Fishing utilized 472 full-
time employees in its day-to-day operations
The company sells to over 300 distributors and retailers
acting as a wholesaler, which provides for increased margins
The company serves a diverse customer base with the
largest customer accounting for less than 10% of the sales
Approximately 30 different fish species harvested and sold
to consumers
Business Overview
Arafura SeaBay of Bengal
Fujian Pingtan Fishing
Fishing Area
Fishing Water Exclusive Economic Zones in Indonesia and India
Fishing Method Trawling and drifting fishing
Fish Species Approximate 30 different types
Demand Base Homes and eateries
Selling Price 5 – 50 RMB per kg
16
Investment HighlightsFavorable Industry Trends
China’s seafood consumption has consistently increased on an annual basis and is expected to continue to grow
Continually expanding Chinese middle and upper class consumers comprise a vast and growing ―customer base with increasing disposable incomes to spend on traditionally more expensive proteins like fish and shellfish
Increasing fish consumption in China also driven by awareness of nutritional profile as a high ―quality, healthy source of protein
Seafood consumption in China is expected to expand going forward with the introduction of refrigerated warehouses in inland rural areas with government support
As part of the 12th Five-Year Plan for 2011-2015, Chinese government has pledged to support and encourage the growth of the fishery industry
11.3 11.512.9
15.117.8
20.822.3 22.6 23.3 23.5 24.3 23.9 25.0 25.5 26.5 26.9 27.9 29.0 30.0 31.0
0
5
10
15
20
25
30
35
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
China’s per capita seafood consumption (kg)
Source: FAO website
Favorable Industry Trends
Proven Fishing Methodology and Attractive
Margins
Large Fleet of Fishing
Vessels
SignificantBarriers to Entry
Long-term Growth
Strategies
Pingtan Fishing has achieved and will maintain high operating efficiency through:
17
Investment HighlightsProven Fishing Methodology and Attractive Margins
Direct SalesCost S
aving
Proven Fishing
Methodology Stable F
ishing
Environment
Cost Saving
The company hires local
crews to save labor costs Vessels get inspected and
repaired directly at nearby fishing bases in Indonesia instead of in Fujian, China
Proven Methodology
Vessels operate in pairs to
take advantage of experienced captains’ intimate knowledge of fishing grounds and to train and supervise less experienced captainsHistorical data helps
optimize fishing criteria and maximize quantity of fish captured
Direct Sales
Pingtan Fishing benefits
from selling its products directly to distributors and retailers, keeping the margins typically paid to wholesalers
Stable Fishing Environment
According to the State of World Fisheries and Aquaculture 2012, each of Pingtan Fishing’s dedicated fishing zones is one of the few regions left that are not overfished
Favorable Industry Trends
Proven Fishing Methodology and Attractive
Margins
Large Fleet of Fishing
Vessels
SignificantBarriers to Entry
Long-term Growth
Strategies
18
Investment HighlightsLarge Fleet of Fishing Vessels
As of December 31, 2012, Pingtan Fishing had 40
owned vessels in operation, including 38 trawlers and 2 drifters.
By the end of 2013, the company expects to expand its
fleet to 64 fishing vessels, representing more than three times expansion from 2011.
Vessels and Capture Growth Since 2008
(1) As of December 31, 2012
Favorable Industry Trends
Proven Fishing Methodology and Attractive
Margins
Large Fleet of Fishing
Vessels
SignificantBarriers to Entry
Long-term Growth
Strategies
Fishing Carrying Capacity Area Tonnage (KW)
TrawlersFuYuanYu135/136 India 264 441FuYuanYu137/138 India 264 441FuYuanYu139/140 India 264 441FuYuanYu151/152 Indonesia 230 441FuYuanYu155 Indonesia 272 441FuYuanYu156 Indonesia 274 441FuYuanYu725/726 Indonesia 297 698FuYuanYu727/728 Indonesia 297 698FuYuanYu729/730 Indonesia 297 698FuYuanYu731/732 Indonesia 297 698FuYuanYu733/734 Indonesia 297 698FuYuanYu735/736 Indonesia 236 368FuYuanYu737/738 Indonesia 192 441FuYuanYu750/751 Indonesia 270 441FuYuanYu791/792 Indonesia 266 552FuYuanYu739/740 Indonesia 292 810FuYuanYu741/742 Indonesia 292 810FuYuanYu743/745 Indonesia 292 810FuYuanYu746/747 Indonesia 292 810FuYuanYu748/749 Indonesia 292 810DriftersFuYuanYu793 Indonesia 210 287FuYuanYu794 Indonesia 207 434
List of Fishing Vessels (1)
# of Vessels 8 8 8 20 40 64 92 124
7,987 6,749 8,30616,119
26,281
43,167
70,500
97,500
0
20,000
40,000
60,000
80,000
100,000
120,000
2008 2009 2010 2011 2012 2013E 2014E 2015E
Volume Captured (in tons)
19
Investment HighlightsSignificant Barriers to Entry
CHINESE FISHING LICENSE
INDONESIAN FISHING PERMIT
RE
LAT
ION
SHIP
CA
PIT
AL
INV
EST
ME
NT
The total number of companies with qualified fishing
licenses in China is only approximately 100
Chinese government is limiting new license issuance to
encourage the consolidation of existing participants within the fishing industry, which provides opportunities to identify and acquire smaller fishing companies
Permits are only issued to companies that have an agreement
with a fishing base, and the capacity of such bases is limited
As of December 31, 2012, Pingtan Fishing has 34 fishing
permits issued by the Indonesian government
Fishing in the exclusive economic
zones is protected and potential new entrants must have relationships with existing local fishing companies and the government
The company enjoys a good
relationship with the PRC and Indonesian governments
History of operations in Indonesia and
China will facilitate future expansion, as existing companies are typically favored
Significant capital investment
is required to establish a fishing company
Average price for a 150-foot
trawler newly built in 2012 is approximately $1 million
Average cost for a fishing
base is approximately $10 million
Favorable Industry Trends
Proven Fishing Methodology and Attractive
Margins
Large Fleet of Fishing
Vessels
SignificantBarriers to Entry
Long-term Growth
Strategies
Investment HighlightsLong-term Growth Strategies
Pingtan Fishing intends to build up a global fishing enterprise by continuing to execute the following strategies:
20
ExpandFishing Fleet
Expand into Processing Access New Fishing GroundIncrease Fishing Bases
Pingtan Fishing is planning to enlarge its fishing vessel fleet to 64 vessels by 2013 through:
Organic growth
Acquiring vessels from other fishing companies
By end of 2015, the quantity of fish caught is expected to be approximately 4x the amount caught in 2012
Pingtan Fishing expects to start construction of its own fish processing plants in the next 2 years
After the processing plants begin operations, the company intends to gradually establish its own brand and vertically integrate to improve profitability
Pingtan Fishing is
actively seeking opportunities to acquire permits to enter new fishing areas globally, such as deep ocean and other coastal countries surrounding China
New fishing grounds will
enable the company to diversify its products and market it covers, and reduce the dependence on the Indonesian Exclusive Economic Zone
As Pingtan Fishing
expands its fleet of fishing vessels and fishing grounds, it plans to set up or acquire fishing bases to support the fishing operations
With its own berthing
spaces and ship repairing facilities, the company can save on port, warehouse and repair costs
Favorable Industry Trends
Proven Fishing Methodology and Attractive
Margins
Large Fleet of Fishing
Vessels
SignificantBarriers to Entry
Long-term Growth
Strategies
21
Competition
(1) Data from Ministry of Agriculture and as of September 30, 2012
Competition within Pingtan Fishing’s dedicated ▪fishing areas is not significant given:
Fishing permits cannot be easily obtained
Existing players are widely dispersed in the fishing areas
According to the Ministry of Agriculture of ▪China, in the nine months of 2012, there were
only 11 Chinese fishing companies operating in
Indonesian waters which have more than 210
fishing vessels, and there were only 3 Chinese
fishing companies operating in the Indian water
which have more than 22 fishing vessels
The charts on the right show a list of companies ▪fishing in the Indonesian waters
Pingtan Fishing is well positioned within the ▪competitive scheme and with future potential
strategic opportunities with Fuzhou Honglong
Ocean Fishery Co., Ltd., a company affiliated
with Mr. Zhuo, to dominate the market
Vessels Operating
in Indonesia (1)
LTM Catch from
Indonesian Waters (1)
(in thousand tons)
52 51
33
24
16
10 85 5 4 4
0
10
20
30
40
50
60
Dalian
Changh
ai
Fuzhou
Honglo
ng
Pingtan
AndaPing
tan
Fishing
Pingtan
HengliDalia
n
Yifeng
Fuzhou
Hongd
ong
China
Nation
al
Fisheri
es
Rongc
heng
Rongy
uanDalia
n
Jurong
Taizhou
Fishing
34.7
28.5
18.6 17.3
7.0 5.9 5.32.9 2.0 1.0 1.0
0
10
20
30
40
Fuzhou
Honglo
ng
Dalian
Changh
ai
Pingtan
AndaPing
tan
Fishing
Pingtan
Hengli
Dalian
Yifeng
Fuzhou
Hongd
ong
Rongc
heng
Rongy
uanDalia
n
Jurong
Taizhou
FishingChin
a
Nation
al
Fisheri
es
Valuation Discussion
23
Note::Source: Capital IQ, Pingtan Fishing and China Dredging’s management(1) Assumes Pingtan Marine’s pro forma financial data equals the sum of China Dredging and Pingtan Fishing’s financial data
Valuation Discussion Multiples Comparison (1)
Enterprise Value/2012 EBITDA Enterprise Value/2013E EBITDA
Pingtan Marine’s pro forma multiples are at a discount to the comparable companies in the same sectors
2012 P/E Multiple 2013E P/E Multiple
6.1x 5.9x 5.9x6.4x
3.0x
-
2.0x
4.0x
6.0x
8.0x
10.0x
Mean - Fishing Industry
Median - Fishing Industry
Mean - Dredging Industry
Median - Dredging Industry
Pingtan Marine
12.3x11.7x
9.8x 9.8x
7.9x
-
3.0x
6.0x
9.0x
12.0x
15.0x
Mean - Fishing Industry
Median - Fishing Industry
Mean - Dredging Industry
Median - Dredging Industry
Pingtan Marine
9.9x
8.0x
10.0x9.0x
5.6x
-
3.0x
6.0x
9.0x
12.0x
15.0x
Mean - Fishing Industry
Median - Fishing Industry
Mean - Dredging Industry
Median - Dredging Industry
Pingtan Marine
7.0x 6.6x 6.7x 6.4x
4.0x
-
2.0x
4.0x
6.0x
8.0x
10.0x
Mean - Fishing Industry
Median - Fishing Industry
Mean - Dredging Industry
Median - Dredging Industry
Pingtan Marine
24
Valuation Discussion Margins Comparison (1)
2013E EBITDA Margin
2013E Net Margin
2012 EBITDA Margin
2012 Net Margin
Pingtan Marine’s pro forma operating statistics outperform its peers
Note::Source: Capital IQ, Pingtan Fishing and China Dredging’s management(1) Assumes Pingtan Marine’s pro forma financial data equals the sum of China Dredging and Pingtan Fishing’s financial data
19.9%14.4%
17.4%12.3%
59.4%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Mean - Fishing Industry
Median - Fishing Industry
Mean - Dredging Industry
Median - Dredging Industry
Pingtan Marine
8.9% 7.2%9.4%
3.9%
37.8%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
Mean - Fishing Industry
Median - Fishing Industry
Mean - Dredging Industry
Median - Dredging Industry
Pingtan Marine
21.2%16.1%
19.6%15.1%
48.2%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Mean - Fishing Industry
Median - Fishing Industry
Mean - Dredging Industry
Median - Dredging Industry
Pingtan Marine
9.5% 7.8%10.3%
4.6%
38.1%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
Mean - Fishing Industry
Median - Fishing Industry
Mean - Dredging Industry
Median - Dredging Industry
Pingtan Marine
Appendix
26
SPAC Initial Public Offering
In May 2011, China Growth raised
approximately $50 million through its IPO
5 million units consisting of one
share of common stock and one warrant with an exercise price of $12.00
Deutsche Bank Securities was sole
book runner and the co-managers were Morgan Joseph TriArtisan LLC and Rodman & Renshaw, LLC
China Growth China Dredging
Merger with Chardan Acquisition Corp. 2010 Private Placement
In October 2010, China Dredging
entered into a merger with Chardan Acquisition Corp. (“CAC”), a public reporting, non-trading shell company domiciled in the British Virgin Islands
All of the issued shares of CAC were
exchanged for 500,000 of the company’s ordinary shares, or 0.95% of the outstanding ordinary shares, while the company’s original shareholders retained 52,177,323 of the ordinary shares, or 99.05% of the outstanding ordinary shares
As a result of the merger, China
Dredging became a public reporting company and CAC ceased its corporate existence
Concurrently with the close of the
merger with CAC, the company entered into a Purchase Agreement with a number of investors
Through multiple closings between
October and December 2010, the company issued 10,012,987 preferred shares to such investors, at $5.00 per share, for aggregate proceeds of approximately $50.1 million
Each preferred share is convertible
into one of the company’s ordinary shares
Net proceeds to the company were
approximately $46.5 million
Appendix Historical Financing
Appendix Pro Forma Corporate Structure
27
Prime Cheer Corporation Ltd
Merchant Supreme Co., Ltd
100%
Offshore
Pingtan Guansheng (WFOE)
Onshore
100%
Dingxin Fishing
Pingtan Fishing
100%
Honghong Zhuo Zhiyan Lin70% 30%
Master Gold Corporation Ltd
China Dredging Group Co., Ltd
100%
Pingtan Zhuoying (WFOE)
100%
Pingtan Xingyi
Wonder Dredging
100%
Qing Lin Panxing Zhuo91% 9%
100%
100%
100%
7.75% 29.95%
China Growth Equity Investment Ltd(Proposed Name: Pingtan Marine Enterprise Ltd.)
China Growth Shareholders CDGC Shareholders Pingtan Fishing Shareholders
62.30%
Duoying FishingRuiying Fishing
Fujian WangGang (WFOE)
Fujian Service
China Dredging (HK) Company Ltd
100%
50%50%
VIE Agreements100%
VIE Agreements
VIE Agreements
100%100%
Appendix Use of Proceeds
28
Pingtan Marine plans to use the funds raised from the business combination for the following capital expenditures plans.(1)
Uses Details Amount
Fishing Vessels Building Plan in 2013
14 brand new trawlers will be built at a building cost of approximately ▪$1.4 million each.6 new trawlers will be built to replace 6 existing fishing vessels at a ▪building cost of approximately $1.4 million each.
$28 million
Initial Working Capital on Project of Lianjiang Phase II
New type of equipments, dredgers and employees with different project ▪experiences are required by Lianjiang Phase II project. The total estimated initial working capital on this project will be at least ▪$22 million.
$22 million
Note::(1) Assumes no redemption and there is $50 million left in the trust account
32
Well Regarded Board of Directors post Merger
Mr. Lin Bao Vice chairman of China Overseas Fisheries Association since May 2012
Vice general manager of Fujian Road & Bridge Construction since September 2005General manager of Fuzhou Honglong Ocean Fishing since February 1997 General manager of Fuzhou Tang Cheng Plaza from April 1989 to January 1997
Mr. Xuesong Song
Chairman and CFO of China Growth Equity
Chairman of ChinaGrowth North and Director of ChinaGrowth South
Chairman and Founder of Chum Capital Group
Co-founder and director of C Media Group
MBA degree from Oklahoma City UniversityMr. Jin Shi
CEO and Director of China Growth Equity
CEO and Director of ChinaGrowth North and CFO and Director of ChinaGrowth SouthPrincipal of Chum Capital Group and Principal of Global Vestor Capital PartnersChairman of Shanghai RayChem Industries
Mr. Yeliang Zhou
Independent director of China Dredging since April 2011
President of Zhejiang Province Venture Capital and Private Equity Association since May 2010Supervisor of Industrial Bank and independent director of Union Trust Limited in ChinaBachelor’s degree in Finance from Xiamen University
Mr. Zengbiao Zhu
Independent director of China Dredging since April 2011
Member of the National People’s Congress Standing Committee of Fujian ProvinceDirector of the China Insurance Regulatory Commission Fujian Bureau from 2004 to December 2009Bachelor’s degree in Finance from Xiamen University
Mr. Xinrong Zhuo
Chairman of the board of China Dredging and CEO since August 2010
Chairman of Fujian Provincial Pingtan County Ocean Fishing Group Co., Ltd. since 2004Director of Fujian Road & Bridge Construction Co., Ltd.
Chairman of Fuzhou Dongxing Longju Real Estate Development Co., Ltd.
Mr. Bin Lin
Senior vice president of China Dredging since August 2010
Member of the board of directors of Industrial Securities Co., Ltd. (SHSE:601377) from November 2003 to October 2006BS in Pharmacy from Shanghai Medical College of Fudan University
30
Appendix Selected Dredging Comparables
Source: Capital IQ, Thomson, Bloomberg and Company filings
($ in millions, except per share data) Share % ofPrice 52-Week Equity Enterprise EV/Revenue EV/EBITDA P/E
Name Ticker 1/26/13 High Value Value LTM FY2012E FY2013P LTM FY2012E FY2013P LTM FY2012E FY2013P FY2014PNon-U.S. ExchangesChina Communications Construction Company LimitedSEHK:1800 1.04$ 96.1% 14,372.4$ 26,460.6$ 0.58x 0.55x 0.50x 7.3x 6.6x 5.9x 9.6x 9.0x 8.0x 7.1x Royal Boskalis Westminster NV ENXTAM:BOKA 45.85 98.4% 5,363.1 5,865.6 1.49 1.45 1.35 7.9 7.8 6.9 14.6 15.3 13.9 12.9 Penta-Ocean Construction Co. Ltd. TSE:1893 2.48 78.3% 709.9 981.1 0.25 0.24 0.23 6.4 6.1 6.2 35.5 35.5 31.0 27.6 National Marine Dredging Company ADX:NMDC 2.78 93.2% 632.8 734.1 0.89 NA NA 4.5 NA NA 5.7 NA NA NA Benalec Holdings Berhad KLSE:BENALEC 0.41 83.8% 330.1 330.4 7.23 4.21 3.58 NM 7.2 5.6 NM 9.5 8.6 8.2 Hock Seng Lee Bhd KLSE:HSL 0.49 85.1% 272.1 214.1 1.08 1.04 0.92 5.2 5.2 4.6 9.1 9.2 8.1 7.6 Xiangyu Dredging Holdings Limited SEHK:871 0.25 64.6% 198.1 245.7 1.32 NA NA 3.7 3.2 2.8 4.9 4.9 4.2 3.5 Dredging Corp. of India Ltd. BSE:523618 4.17 69.7% 116.7 197.0 1.97 NA NA 10.4 NA NA NM NA NA NA
Non-U.S. ExchangesMean 1.85x 1.50x 1.32x 6.5x 6.0x 5.3x 13.2x 13.9x 12.3x 11.1x Median 1.20 1.04 0.92 6.4 6.3 5.7 9.3 9.4 8.3 7.9
U.S. Listed:Great Lakes Dredge & Dock Corporation NasdaqGS:GLDD 9.42$ 95.9% 558.4$ 775.0$ 1.20x 1.14x 0.99x 11.8x 9.2x 6.5x NM 38.6x 15.8x 11.1x Orion Marine Group, Inc NYSE:ORN 7.61 92.2% 206.6 166.9 0.67 0.62 0.51 NM NM 7.5 NM NM NM 22.8
U.S. Listed:Mean 0.93x 0.88x 0.75x 11.8x 9.2x 7.0x NM 38.6x 15.8x 17.0x Median 0.93 0.88 0.75 11.8 9.2 7.0 NM 38.6 15.8 17.0
All CompaniesMean 1.67x 1.32x 1.16x 7.2x 6.5x 5.8x 13.2x 17.4x 12.8x 12.6x Median 1.14 1.04 0.92 6.8 6.6 6.0 9.3 9.5 8.6 9.6
31
Appendix Selected Fishing Comparables
Source: Capital IQ, Thomson, Bloomberg and Company filings
($ in millions, except per share data) Share % ofPrice 52-Week Equity Enterprise
Name Ticker 1/26/13 High Value Value LTM FY2012P FY2013P LTM FY2012P FY2013P LTM FY2012P FY2013PChina-Based Fishing CompaniesChina Fishery Group Limited SGX:B0Z 0.51$ 50.7% 521.9$ 1,046.0$ 1.73x 1.60x 1.65x NA 5.3x 4.4x 4.3x 6.7x 4.8x 5.4x Cnfc Overseas Fishery Co SZSE:000798 1.21 83.3% 387.4 361.8 6.52 NA NANA NM NA NA NM NA NA ShangHai Kaichuang Marine International Co.,Ltd.SHSE:600097 1.97 90.9% 398.3 411.8 3.40 NA NANA NM NA NA NM 20.4 17.5 China Ocean Resources Co., Ltd. KOSE:A900050 2.31 40.7% 173.1 275.2 2.33 NA NANA 5.4 NA NA 4.3 NA NA Shandong Zhonglu Oceanic Fisheries Company LtdSZSE:200992 0.70 96.1% 185.3 183.7 2.51 NA NANA NM NA NA NM NA NA
China-Based Fishing CompaniesMean 3.30x 1.60x 1.65x NA 5.3x 4.4x 4.3x 5.5x 12.6x 11.4x
Median 2.51 1.60 1.65 NA 5.3 4.4 4.3 5.5 12.6 11.4
Global Fishing CompaniesAustevoll Seafood ASA OB:AUSS 5.55$ 98.6% 1,122.2$ 2,267.3$ 1.10x 1.08x 1.04x 9.9x 9.2x 6.5x 23.4x 17.6x 8.0x Dongwon Industries Co., Ltd. KOSE:A006040 291.36 93.9% 979.9 1,371.0 0.95 0.91 0.84 6.9 6.3 5.4 9.4 9.0 7.7 Oceana Group Ltd. JSE:OCE 7.59 92.7% 760.7 741.1 1.44 1.39 1.17 7.7 7.7 7.2 16.7 15.7 13.5 Pescanova SA CATS:PVA 22.27 59.6% 643.7 1,805.6 0.79 0.76 0.72 7.1 6.8 6.1 7.9 7.3 6.0 Copeinca Asa OB:COP 8.12 92.2% 463.1 654.2 2.14 2.16 2.07 6.6 6.3 5.9 10.0 9.2 8.6 Silla Co., Ltd. KOSE:A004970 22.13 85.7% 348.8 298.2 0.99 NA NANA 12.0 NA NA 15.1 NA NA Sanford Ltd. NZSE:SAN 3.65 94.6% 341.8 480.9 1.25 1.21 1.19 12.5 8.6 8.1 19.6 14.4 12.5 Austral Group S.A.A. BVL:AUSTRAC1 0.09 71.8% 233.0 301.7 1.10 NA NANA 3.8 NA NA 7.0 NA NA
Global Fishing CompaniesMean 1.22x 1.25x 1.17x 8.3x 7.5x 6.5x 13.6x 12.2x 9.4x
Median 1.10 1.15 1.10 7.4 7.3 6.3 12.6 11.8 8.3
All CompaniesMean 2.02x 1.30x 1.24x 7.7x 7.1x 6.2x 12.0x 12.3x 9.9x
Median 1.44 1.21 1.17 7.0 6.8 6.1 9.7 11.8 8.3
EV/EBITDA P/E EV/Revenue
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